From Morningstar: 2024-04-04 08:40:00

Residents in the south of England are dealing with serious drainage issues, with human waste floating in the streets, highlighting the failing infrastructure of utility companies, notably Thames Water. The company is facing financial collapse due to debt totaling £15.7 billion, sparking concerns of potential nationalization and negative implications for the UK water sector.

Analysts warn that a default by Thames Water could lead to a rise in sector funding costs and an increase in customer bills for other UK water utilities. Morningstar DBRS has noted a lack of investor confidence stemming from Thames Water’s significant debt load and potential government intervention. Privatised water companies like Thames Water have struggled due to poor ownership structures, pointing to a flawed business model.

Joe Lycett’s 2024 documentary urged UK water companies to halt dividend payments amid infrastructural issues. Former Thames Water owner Macquarie has been accused of prioritizing shareholder payouts over fixing infrastructure problems. The spotlight on dividend payments has sparked a conversation about corporate governance, ethics, and placing financial responsibilities over shareholder interests. Investors are advised to scrutinize how dividends are funded before investing in companies.



Read more at Morningstar: Business as Usual, Says Thames Water. Should…